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The Deal: Twitter Sets Up Revenue Streams Prior to IPO #ftw

Written by: The Deal08/28/13 - 5:22 PM EDT

Tickers in this article:
FB

NEW YORK (TheStreet) -- Twitter is trying to assure that it doesn't repeat the mistakes of rival social media company Facebook, which took 15 months to catch up to what proved to be an overinflated float price.

Even as the market -- and its own investors -- clamor for the next "IPO of the year," the micro-blogging platform is lining up mega revenue streams to complement its billion-dollar ad business. This could have Twitter invading the space of live events promoters and app store operators like Apple Inc. and Google Inc., say those familiar with the company's plans.

The company has held off on decision-making regarding its initial public offering, sources said, in part because of the unknown trajectory of public markets for the rest of the year.

Indeed, there's a lot to be concerned about, from the central bank pulling back from asset purchases to a possible strike on Syria, plus the next round of Washington hyperbole concerning the U.S.'s deficit limit.

At least one investor, however, believes the time is right. "They could do it very quickly this fall," this shareholder said, adding, "I would go now, rather than in 2014."

The shareholder, who put the company's market capitalization at about $12 billion, suggested it would rise, but not past $15 billion, by the time it debuts on public markets.

That is a substantial contrast to Facebook, which saw eager institutional investors push an oversubscribed offering into a $100 billion market cap leading up to its IPO.

An investor in the company said Twitter could very easily raise a fresh round of capital for a longer stay as a private entity, but that few feel this is the optimal path.

The company has ramped up its revenue and is expected to exceed $1 billion in advertising revenue, a source said, but Twitter's true potential may lie in yet-undeveloped verticals.

News on Tuesday of the hiring of former Ticketmaster Entertainment CEO Nathan Hubbard signaled Twitter's intent to move from live commentary to live events. Though there are incumbents in the sector -- such as Live Nation Entertainment -- they have little presence on social and mobile platforms.